NIS Act needs reform-PAC

Outline of disucssions between Public Accouts Committee and members of the cabinet regarding the NIS's failure to collect contributions from employers.

The National Insurance Scheme (NIS) came in for strong criticisms from at least one lawmaker Tuesday over its failure to collect contributions from some employers.

Michael Peart, member of Parliament for South Manchester, said the NIS has been failing contributors who have been making the statutory contributions but who are being robbed by employers who fail to pay over the money.

Peart made the accusation during the sitting of Parliament's Public Accounts Committee (PAC) after it was disclosed that thousands of ex-sugar workers may be disenfranchised because the state-owned Sugar Company of Jamaica (SCJ) failed to pay over $284 million to the NIS.

The money was deducted from the workers' salaries.

But with the failure of the SCJ to pay over the money several sugar workers, who have had their positions made redundant or have been retired, may not benefit from the NIS by way of pension.

Annual statement

"What should be mandatory on the NIS is that every year, you send out to every contributor a statement. When that is done, if I don't get my statement, it forces me to go and investigate why I did not get my statement," said Peart.

"The responsibility is with the NIS office. They delegated the employer as agent to collect the money, therefore the buck stops with the NIS office," he emphasised.

By law, employers are required to collect 2.5 per cent of employees' taxable salary to an established limit and remit this to the NIS.

Representatives of the Auditor General's Department Tuesday told the PAC that, despite being highlighted in previous auditor general reports, there remained several deficiencies which "could deny employees certain benefits and entitlement when they become due and negatively impact the viability of the scheme".

The auditor general found that 1,042 employers and self-employed persons in 11 parishes continue to be delinquent in filing annual returns for the years 1994 to 2008, while 1,462 did not remit contributions to the NIS.

At the time of the audit, $354 million collected from employees on behalf of the NIS was not paid over.

Amendment

The Ministry of Labour and Social Security said it has since collected $50 million of this sum.

Dr Omar Davies, the chairman of the PAC, as well as Central Kingston MP Ronnie Thwaites, suggested an amendment to the NIS Act to ensure that contractors who deducted contributions from the salaries of workers pay this over.

Alwin McIntosh, the permanent secretary in the Ministry of Labour and Social Security, told the PAC that "a sizeable and a vigorous compliance unit" is in place to collect money on behalf of the NIS.

Meanwhile, the PAC has said it would be recommending to Parlia-ment that the paying over of NIS and NHT contributions be the first call on the accounts of government agencies.

McIntosh told the PAC that in the case of the SCJ, there are discussions with the Ministry of Finance to use some of the proceeds of the divestment of sugar assets to pay the $284 million owed to the NIS